PAMM, MAM and copy trading

Copy trading is the simplest. A client chooses a strategy and their account mirrors its trades proportionally. The client keeps their own account and can stop at any time. It is the easiest to explain to a client and the easiest to unwind.

PAMM pools client money into a single allocated fund that a manager trades, with profit and loss distributed by each participant's share. MAM is closer to copy trading in mechanics but built for a manager running many client accounts under one interface, with allocation rules per account.

The PAMM arithmetic is worth seeing once, because it is where vendor descriptions usually go vague. The pool is denominated in units. Illustratively: a $100,000 pool at a net asset value of $1.00 is 100,000 units, so an investor depositing $10,000 holds 10,000 units. If the manager finishes the month up 8 percent, the unit value is $1.08 and the investor's stake is worth $10,800. A 20 percent performance fee applies to the $800 gain, which is $160, and on this platform that fee is crystallised by cancelling the equivalent units, $160 at $1.08 is about 148 units, from the investor's holding. The investor keeps roughly 9,852 units worth about $10,640, and the unit value itself never moves because of a fee, so every other participant's number stays honest.

The practical difference for a broker is what happens when something goes wrong, and how clearly you can show each client what was done with their money and why.

Offering managed or copied strategies changes your regulatory position in most jurisdictions, sometimes substantially, because you are facilitating someone managing other people's money. Whether your licence permits it, and under what conditions, is a question for your regulatory adviser before it is a question about software.

There are also obligations you take on regardless of the regime. Clients need to understand what they are agreeing to, what they are being charged, and how to stop. A managed product that a client cannot exit or cannot understand is a complaint waiting to be filed.

Copy trading is built in, with strategies clients can subscribe to and unsubscribe from, proportional allocation to each subscriber's account, and the position and performance history behind each strategy.

Because the copy engine runs inside the same system as the accounts it trades, subscriptions, executions and balances stay consistent without a nightly reconciliation between separate products. That is the failure mode of bolted on copy trading: a client's copied position and their account balance disagreeing, and nobody able to say which is right.

Every action a manager or a member of staff takes on these accounts lands in the same audit trail as everything else, with actor and timestamp.

You will notice this page shows no performance figures, no return charts and no leaderboard screenshots. That is on purpose.

Published strategy performance is one of the most heavily scrutinised things a brokerage can put in front of retail clients, and marketing pages are the wrong place for it. What a strategy has returned belongs inside your platform, shown to a client in context with the risk disclosures your jurisdiction requires, not on a vendor's website as a selling point.

The software supports showing clients what they need to see. What you choose to display, and with what warnings, is a decision for you and your compliance adviser.